The U.S. coffee industry supports 2.2 million jobs and contributes around $343 billion – about 1.2% of GDP. Tariffs that raise bean costs pose risks not just to businesses but to U.S economic stability as well.
The tariff tantrums of President Trump continues and he has pressed ahead with tariffs across multiple sectors, and coffee has not been spared. The decision will circle back to hit the U.S market. Retail coffee prices are already climbing. The imposition of a 50% tariff on Brazilian coffee, on top of an existing 10% duty – has jolted small roasters such as Lost Sock Roasters. Co-owner Jeff Yerxa warned that the tariffs “will kill that market,” noting that Brazil supplies nearly one-third of U.S. coffee imports.
The Dragon’s Advantage
Meanwhile, China is capitalizing on the fallout. Already Brazil’s largest overall trading partner, China has issued export licenses to 183 Brazilian coffee companies, effective July 30 and valid for five years. With Chinese coffee consumption growing at roughly 20% annually, Brazil is tapping into a fast-expanding market eager for premium beans.
A very interesting and major development is Luckin Coffee, China’s largest Coffee Chain especially in Tier 1 and 2 cities in China. Luckin has forayed into the US market opening two stores in Manhattan in New York City, with many more on the anvil. Processed Brazilian coffee will be their “trump” card in displacing Starbucks with App based coffee at a significantly more affordable price compared to competition. In true Chinese tradition, processing and roasting of coffee beans is being done at a much lower cost than the Italians and this is poised for a major discontinuity and displacement of the Italians.
Indian coffee growers remain largely unaffected for now, as Brazilian coffee is largely Arabica beans, while India’s crop is primarily Robusta. To the extent that exotic Specialty Coffee is being imported by American Customers like Blue Bottle Cafe, there will be a major setback for this segment. The US accounts for only 3% of Indian Coffee exports.
Lessons for Indian Coffee Industry
Domestic coffee consumption has been surprisingly flat over the past two decades in India with Instant Coffee constituting a major share of the consumption. The illusion of increased mass market consumption with the opening up of hundreds of cafes across Tier 1 cities has not really impacted overall consumption. We should learn from Colombia’s and China’s mass market expansion in coffee consumption. Consumers have been encouraged to stop drinking Coca-Cola, instead drink local brews.
The Tea shops in India are a visible affirmation of the opportunity for providing “affordable coffee” to the Indian consumer. Planters in Coorg could benefit by diversifying and catering to this value added segment instead of sales of raw coffee beans. This is also an excellent opportunity to supplement income from merely growing and selling beans.
This should be posted as a comment, with the heat map image above) as a riposte to Trump’s Coffee Tantrums (that should have been the title of the article 😊!!):
Brazil’s coffee lands across Mimas Garias, including all top regions from Southern Minas to Alta Mogiana and the Cerrado already have been hammered by three intense cold fronts this year; many have tried to explain here MANY times even if the physical damage has not been massive the STRESS IMPACT on the upcoming flowering for the already heavily compromised 2026 harvest is SEVERE. However, the market tries to ignore it or can’t seem to grasp the whole issue of basic #coffee agronomy and WHY this matters big time.
The above pic is even more CRYSTAL CLEAR just how serious the frost threat is going to be – for the damage is already done to the 2026 flowering and the forecasts are already down to a MAX crop potential of 70% for the next crop. The more cold, the more stress will be caused – the sad reality of how climate change has brought about the COLLAPSE of the entire global coffee supply chain and why THE WORLD IS RUNNING OUT OF COFFEE !!
Nice to see what is happening in Brazil, Vietnam, Colombia and there must be similar initiatives in coffee producing countries like Kenya, Ethiopia and Indonesia. Further innovations are taking place in a major way to retail and reach the end consumer in very affordable manner, especially in China and Vietnam.
Whenever friends from abroad or for that matter from Mumbai and Delhi are served Espresso made from well processed Coorg Coffee beans, they rank it amongst the best that they have tasted. As is often said – Small is Beautiful – it’s the same with wine grown from different terroirs. Reaching the end customer/consumer is key.
We have to find “local solutions” and learn from experiences from across the world. The opportunity in Coorg, with the massive tourist footfall, is humongous. What is lacking is entrepreneurial mindset.
The trend of the thought process being expressed in the Comments is very interesting.
It is time that all stakeholders in the Indian Coffee business also focussed on the retail and domestic market as it has the potential to create a virtuous cycle within the Indian coffee industry. Many other countries are already working on this strategy.
The rise of Colombian trader-owned coffee shops and chains represents a strategic shift in the coffee industry. The Traders seem to have a stranglehold on the value addition everywhere. This in itself presents a great opportunity for the Growers to find ways and means to reach the end consumer.
As of now, the emphasis in India is on Specialty Coffee, which is a good endeavour but has minimal impact on the majority of coffee growers. We need to create alternate ways to create value for the Growers – better margins per kg of beans sold!
Luckin Coffee and China on the threshold of becoming a major player in the international coffee market is new to my ears. Many conferences get held in Bangalore City – yet none of them talk about the success of affordable coffee being sold in Colombia who were reeling from the deliberations of price manipulation by importers in Europe. Vietnam and China are excellent case studies too.
It’s perplexing – so what ails coffee consumption in India. The figures are alarmingly (almost) stagnant!
Wonder what could be the reasons?
– Colonial hangover of drinking tea?
– Perceived as an elitist brew?
– Not enough focus on mass consumption at affordable prices, compared with Tea?
– Very little awareness campaigns.
Apparently Indian coffee is rated amongst the best in the world as it is “shade” grown. Insufficient marketing and the dominance of Instant Coffee by Nestle and Unilever – with TATA Coffee being bereft off any imagination and innovation. Their alliance with Starbucks has proven mediocre.
In stark contrast look at Vietnam whose expansion of coffee was an accidental encouragement from their Communist brothers from East Germany. Domestic Consumption
in Vietnam is forecast at 4.9 million bags, up from 4 million in 2024/25. Over 500,000 coffee shops operate across Vietnam, from street vendors to modern chains. Takeaway, home brewing and specialty coffee trends are expanding, particularly among younger, urban consumers.
Sadly, we have a lackadaisical Government run Coffee Board, who despite some extraordinary talent is languishing – is it lack funds or minimal encouragement from the Ministry of Commerce?
It’s not too late. KPA, CPA and the planting community with leading experts must draw up an immediate plan to double consumption – follow the Vietnam model. Depending on fickle exploitative Western markets is always fraught with risk and price exploitation.
I read the articles of CLN Online and more interestingly the comments which are very well articulated. I live close to Milan and have on occasion asked my Kodava friends whether we should import coffee beans from Kodagu. The answer will be clearly explained below 👇🏼
For a relatively small country like Italy there are about 162,000 coffee bars serving on average 175 cups of simple espresso every day. These are the estimates from the Italian Federation of Public Exercises. As is well known, Italy “buys” coffee for processing – the well-known brands being Illy and Lavazza. Curiously they are imported as premium branded coffee back to India!
India deserves Lakhs of coffee outlets – it provides employment, better value for the primary produce and the creation of a robust domestic market for the country’s coffee production. Export of commodities should become passé and per gm of coffee, significantly higher value is derived by brewing and selling coffee in a cup?
This is the case I read about – In recent years, Colombian coffee traders have increasingly ventured into specialty coffee retail, launching their own café chains to capture greater value locally and connect directly with consumers. This strategic shift highlights the quality of Colombian coffee while reshaping the country’s coffee culture. Colombia’s growing domestic coffee consumption also presents a lucrative opportunity.
Nice article. Well written.
Good article with a proper attempt at analysing what’s going on. The fact that China is emerging as a major player in the global market by processing coffee from Brazil should make the likes of Starbucks and Illy/Lavazza from Italy sit up.
And then there is Luckin Coffee Inc. – a Chinese coffee company and coffeehouse chain founded in Beijing in 2017. In July 2025, Luckin had 26,000 plus stores globally. The company operates shops, stores, and kiosks that offer coffee, tea, and food, generally at lower prices than their competitors. Luckin Coffee, China’s largest coffee chain, has officially entered the U.S. market. Luckin’s opened two shops last week in New York City, and the locations mark the start of stiff competition for Starbucks.
Why are we so slow in India to seize opportunities. Siddharth from Cafe Coffee Day had done brilliantly and then with his shocking demise, none have been able to replicate his success. The coffee consumption trend in India seems to be abysmally low. We need to think out of the box and act swiftly if we have to remain relevant, by adding value to the ordinary bean and creating sufficient local demand to avoid dependence on western markets.